On December 29, 2021, we posted an article on our website entitled, “Florida DOR’s 2022 Legislative Package BAD for Florida Business,” which included a link to the twenty proposed ideas prepared by the Florida Department of Revenue (“DOR”). These ideas are a wish list of how the DOR wants to further mistreat taxpayers. We are posting a series of articles involving a more in-depth review of these proposed ideas and how the ideas may impact you and your business. Senator Joe Gruters, from Senate District 23, is sponsoring this legislation in SB 1382, and Representative Cyndi Stevenson, from House District 17, is the sponsor of the companion bill in the House in HB 1041.
Part VI of this in-depth review looks at a couple of DOR’s concepts that appear to be Taxpayer friendly, but there appear to be ulterior motives lurking beneath the surface to the uninformed for DOR’s fourth and ninth concepts. The fourth concept allows for an automatic refund if an audit assessment results in an overall overpayment of taxes, provided it’s within the three-year statute of non-claim under s. 215.26, Fla. Stat. The DOR’s auditors are already supposed to be recognizing any overpayments and give Taxpayers a credit or offset of any overpayments toward any deficiency in tax, penalty, or interest pursuant to s. 213.34, Fla. Stat. Do you know how often the DOR recognizes these overpayments? Rarely. So, how often would a compliance audit result in the need for a refund? Even more rare. Should this rarity occur, a Taxpayer would have to apply for refund by filing an Application for Refund (DR-26, which is one type of refund application), and a refund audit is generally necessary. It is very possible that a Taxpayer would lose part of the statutory period if an Application for Refund is required. This is exactly the reason DOR is proposing the fourth concept, which is a good thing. However, this is so rare that this appears to be a solution looking for a problem.
DOR’s ninth concept also looks to be Taxpayer friendly; however, it could just be the “wolf in sheep’s clothing.” The DOR claims it does not have the authority to review or reopen an audit once it has become final and all appeal and protest rights have expired. Although, DOR claims it does not have the authority to conduct a post audit review, DOR has been doing so for more than two decades – and decided to stop suddenly, which was to the detriment of so many wrongfully-assessed taxpayers. Such reviews were supposed to allow in rare circumstances where IF the Taxpayer could show “gross error” by the DOR in an assessment that the DOR could make an adjustment to the assessment. In a DOR legal opinion back in 1999, there was guidance provided to the DOR on several issues including the ability to accept these rare discretionary reviews. DOR’s Technical Assistance and Dispute Resolution (“TADR”) conducted these discretionary reviews for years and provided a written response to such requests. In 2015, TADR abruptly stopped accepting the reviews requests claiming TADR did not have the statutory authority to conduct the reviews. Truth be known, TADR had a 9-month backlog of these review requests, and TADR wanted a way to wipe these requests from their workload. DOR’s General Tax Administration (“GTA”) program has been handling these reviews ever since. The GTA reviews are not in writing, are quick with many reviews taking a mere few minutes, and do not have any analysis – even if the request involves a legal challenge, i.e., deprivation of procedural due process. DOR’s ninth concept is attempting to obtain the statutory authority to reopen a closed audit in very limited circumstances, and within a narrow window of time. The Taxpayer will be required to demonstrate that they failed to timely protest due to a qualifying event that is beyond the Taxpayer’s control. A qualified event would include the death; life-threatening illness or injury of the taxpayer or an immediate family member or responsible party or a member of their family; acts of war or terrorism; natural disasters, fire, or other catastrophic loss. Worse off, any requests must be brought within 180 days after the expiration of the time allowed under s. 72.011, Fla. Stat., or roughly 300 days after the issuance of the Notice of Proposed Assessment (“NOPA”). Although this concept appears to be Taxpayer friendly by providing some means to review a closed audit, the DOR will use this statute to deny a Taxpayer an opportunity to correct a gross error IF the circumstances don’t fall squarely within the specified circumstances AND/OR if not brought within 180 days. There are far too many instances of Taxpayers never receiving a NOPA only to find one day their bank account is suddenly frozen. After some digging, it is found DOR has a NOPA with a very old date on it that was never received by anyone, and proof of mailing cannot be made by DOR. In these instances, a Taxpayer’s Constitutional Rights are substantively and grossly affected by DOR’s malfeasance. The proposed legislation’s attempt is to dress up the ability of DOR to violate a Taxpayer’s rights and attempt to have the authority to deny a Taxpayer the ability to fight a NOPA that was never received. DOR should not be allowed to do as much.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 150 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
SB 1382 – Tax Administration
HB 1041 – Tax Administration
72.011, FS – Jurisdiction of Circuit Courts in specific tax matters
213.34 FS – Authority to Audit
215.26, FS Repayment of Funds Paid into State Treasury in Error
ADDITIONAL RESOURCES
Florida DOR’s 2022 Legislative Package BAD for Florida Businesses, published December 29, 2021
Part 1 – FL DOR’s 2022 Legislative Package, published January 9, 2022
Part-2 - 2022 Legislative Package, published January 21, 2022
Part-3 - FL DOR’s 2022 Legislative Package, published January 21, 2022
Part-4- FL DOR’s 2022 Legislative Package, published January 21, 2022
Part-5– FL DOR’s 2022 Legislative Package, published January 21, 2022
FLORIDA SALES TAX AUDIT HELP, published August 24, 2020, by James Sutton, CPA, Esq.
GO TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2013, by James Sutton, CPA, Esq.